If you are purchasing your first home, the government is providing assistance. This help from our government also applies to anyone purchasing a home who has not owned a house during the past 3 years. If someone was renting or living with family during this three year period, this new tax credit will be available to them, too.

The new credit being made available extends only to purchasers who buy a home between April 9, 2008 and June 30, 2009. This is our government’s attempt to create activity in the housing market while helping numerous people become homeowners. Any home purchase will qualify whether the home is new, old, or in need of repair.

If you are able to close on the purchase of a home during this specific time period, you will be eligible for a credit of 10% of the purchase price, up to a maximum of $7,500 ($3,750 if you are a single person) against your federal tax liability for 2008 or 2009. This is what is referred to by the government as a “refundable” tax credit. “Refundable” refers to the fact that if you owe the government a specific amount in taxes and it is less than the “refund” you have qualified for, you will receive the difference in cash from the IRS. This would be a great source of funds for getting settled into your new home and providing a few of the new home purchases that everyone needs.

Unlike many others, this tax credit contains a clause stating that beneficiaries must repay the money to the government. Beginning in the second year of homeownership, taxpayers are expected to begin making regular payments to the government when filing their federal tax returns. The payback period may be extended up to 15 years as long as regularly scheduled payments are being made.

As with any law passed by our government, there are many exceptions, qualified clauses, etc. so be certain to consult a financial adviser or your accountant regarding your specific qualifications for this new tax credit.